Lenta Ltd., the Russian hypermarket chain in the process of listing its shares in London, is valued at between $5.3 billion and $6.2 billion by Moscow-based VTB Capital, said three people familiar with the matter.
VTB, both an underwriter and a selling shareholder in Lenta’s IPO, is pitching the preliminary valuation based on analyst estimates to potential investors while gauging demand to determine the price range, said the people, who declined to be identified as the matter is confidential.
Lenta, controlled by U.S. leveraged buyout fund TPG Capital, yesterday announced plans to offer shares in London. Sales and selling space at the St. Petersburg-based company are increasing faster than at any competitor, Chief Executive Officer Jan Dunning said.
Lenta is seeking to list at a time when appetite for riskier developing-nation assets has soured amid signs of a slowdown in China as the Federal Reserve reduced monetary stimulus. Russia cancelled a bond auction for the second consecutive week today after an emerging-market rout sent yields on the nation’s bonds maturing in 2028 to record highs.
Dunning yesterday downplayed concern over slowing growth in the Russian economy. The retailer reported an 11.4 percent margin on earnings before interest, taxes, depreciation and amortization last year, beating Russia’s retail industry leader OAO Magnit (MGNT) by profitability. Sales rose 31 percent as Lenta increased selling space by 35 percent. Same-store sales advanced 10 percent.
Officials at Lenta, VTB and TPG declined to comment on the valuation. The owners, also including the European Bank for Reconstruction and Development, are seeking to raise about $1 billion from the IPO, two people familiar with the matter said last week. No new equity will be sold.
The retailer has 77 warehouse-sized hypermarkets and 10 supermarkets in 45 Russian cities. It is seeking to double selling space in three years.
Lenta plans to list global depositary receipts in Moscow after its shares are admitted to London trading.
JPMorgan Chase & Co., Credit Suisse Group AG, VTB Capital, Deutsche Bank AG, UBS AG and TPG Capital BD are managing the sale.